The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Foreign Exchange

Market meltdown: Good for FX

One global head told me this week that as recently as two years ago FX was regarded as the mat that all the whizzkids in credit and equity derivatives wiped their shoes on as they made their way up. I don’t think that’s the case now.

After listening to countless experts and reading various pieces of research, it seems that the end of the world is nigh. The sense of doom and gloom must be the deepest it’s been for years.


Concerted action from the Fed and other central banks to inject liquidity this week has generated a quasi-conspiracy theory. I received notes from two chartists stating that the Fed acted to stop the S&P 500 breaching a key level on the downside; and I don’t know how many times I heard that the central banks are accepting junk as collateral for their repo tenders when they are not.


All very interesting, but it’s my view that the negativity is over done. Of course, the shake out from the sub-prime crisis is going to take years to settle, but much of the coverage continues to insist that the world’s financial system is on the point of collapse.


Yet, for the moment, FX appears to be immune and business is booming. There are obviously issues in the swaps market, highlighted in the Bank for International Settlement’s latest quarterly review. Longer term, these problems may well impact FX and other assets – after all, a freeze-up in what is essentially a $2 trillion-a-day funding market must create problems.




You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree